A new survey from ING Direct revealed only one in two Canadians are able to put away an extra $25 a week. Most people I know make it a daily habit to go to their local Starbucks on the way to and/or from work each weekday. It’s easy to spend $5.00 or more a day on the luxury of a cup of coffee.
What if instead, you skipped the morning drive thru and saved that $5.00 each weekday and put it down each month as a mortgage prepayment?
By forgoing the morning coffee each weekday and saving $5.00 instead, you would save an extra $25.00/week and be able to put an extra $1300 into your mortgage.
Assuming a $250,000 mortgage with a 4.5% interest rate amortized over 25 years making bi-weekly accelerated payments, if you made a lump sum payment of $50 each bi-weekly payment:
By skipping the weekday morning coffee you could pay your mortgage off 11 years and 9 months earlier and save a whopping $72,496.91 in interest over the life of your mortgage!
Think about that the next time you’re ordering a Grande Latte.